Feature Article - January/February 2009

Ride the Waves of Economic Change

Make Motivation & Rewards a Top Priority

By Emily Tipping


hile the financial crisis and economic meltdown have been spiraling throughout the U.S. and global economy for many months now, the reverberations are still being felt—and may be felt for some time to come. In January 2009, the Labor Department announced unemployment for December had jumped to its highest level since 1993 as payrolls shed more than half a million jobs.

And according to The Conference Board, this year will see a continuation of the "global contraction," despite capital infusions, stimulus packages and interest rate cuts. "The events of the past year are and will change the fundamentals of doing business," the organization reported in late 2008. "Exactly how, and how much, are questions to be addressed as all these countries move through and finally emerge from this contraction."

Many businesses are struggling to do more with less. To do so, they must carefully gauge their situation and find the proper balance between strategically reducing their expenditures while injecting the right amount of innovation and ingenuity into what they do to ensure their future survival.

Motivation, incentive and reward programs are impacted by both sides of this precarious balance. The need to motivate the workforce, channel partners, sales professionals and others is likely greater than ever, but you're also likely to be working with a smaller budget and maybe with targets whose ability to get things done is more challenged than ever, and that requires some creativity and smarts. How should you adapt your program to meet the current situation?

Engagement Dilemma

You know engagement is critical. According to a recent Gallup analysis, the most engaged workers have 62 percent fewer accidents, 51 percent less theft and breakage, 51 percent lower turnover and 27 percent lower absenteeism compared with the least engaged workgroups.

But as companies cut back on bonuses, salaries and benefits, as more layoffs and restructuring come to pass, employees grow anxious. And according to research from Sirota Survey Intelligence, employees who are anxious about the future can adversely affect a company's profitability—through poor customer service, lower intellectual engagement and even planning to leave.

"I've seen some studies around the stress the American worker is feeling today, and those levels are all up," said Chris Gaia, vice president of marketing for Maritz Travel. "The unsettled nature of the economy makes it hard to keep people focused on providing the services and value in a company setting that make the company successful."

Derek Irvine, vice president of Global Marketing & Client Strategy for Globoforce, a provider of global strategic recognition solutions, said there's real danger of a "psychological recession." He added, "Employees' moods and state of mind are affected. The negativity seems never-ending, and that has a knock-on impact in terms of how energized and ready to perform employees are."

Businesses can prevent such an event from occurring through smart management, according to Douglas Klein, president of Sirota Survey Intelligence. "Businesses need to manage through this uncertainty and these business cycles—rather than from within them," he explained. "They need to adopt strategies—before negative business events occur—that will mitigate the impact of uncertainty on employees."